Best Strategies to Boost Your Social Security Benefits

When you start taking Social Security benefits is one of the most crucial factors affecting your financial security in retirement. The consequences are enormous, especially if you are married. At the same time, Social Security is a contentious subject as policy makers debate how to put the program on a sound footing for future generations. In this special report, Kiplinger's tells you how to make the most of benefits if you're nearing retirement and what you can look forward to if you're still years away.

Figuring out when to apply for Social Security isn't as complicated as unraveling the human genome. It just feels that way. That's because there are numerous strategies that, used to the best advantage, could increase your lifetime benefits by tens or even hundreds of thousands of dollars.

First, the basics. The maximum benefit for someone retiring at full retirement age in 2015 (66 for those born in 1943 through 1954) is $2,663 a month, or $31,956 a year. If each spouse in a married couple qualified for the maximum, they would receive nearly $64,000 a year. And benefits are automatically adjusted each year to keep up with inflation. (For 2015, the cost-of-living hike is 1.7%.)

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You are eligible for benefits as long as you have worked at least 10 years in jobs or self-employment covered by Social Security. Your personal benefit will be based on two main variables: your earnings in the 35 highest-paid years of your career and your age when you start receiving your benefits. You can sign up for Social Security as early as age 62, but your benefit will be cut by 25% to 30% compared with what you'd receive at full retirement age. For people born after 1954, full retirement age gradually rises; for those born in 1960 and later, it's age 67. The later your full retirement age, the bigger the hit if you claim benefits at 62. If you wait to claim Social Security until after your full retirement age, you'll be rewarded with delayed-retirement benefits that boost your payout by 8% a year up to age 70.

The third variable in your claiming strategy is your marital status. Married couples have an arsenal of extra strategies that can boost benefits, and they don't necessarily end with divorce or the death of a spouse.

One other thing: To select the strategy that's right for you, you must give serious thought to some difficult and sobering questions, such as how long you think you'll live. The longer you live, the longer you're expected to live, and life expectancies have been gradually increasing. The latest government statistics show that men alive at age 65 are expected to live to age 82.9; women of the same age are expected to live to 85.5.

Claiming Social Security at age 62 makes sense if you think you won't live very long. But if you're healthy and have a family history of longevity (especially on your mother's side), it's a reasonable bet that the bigger benefits you will earn by delaying will pay off handsomely.